Aussie overall CPI slows to 3-year low, core inflation rises
Markets do not price in RBA rate cut before May 2025 - UBS
Reserve Bank of New Zealand cuts interest rates to 4.25%
Updates to close, add quotes in paragraphs 4 & 5
By Shivangi Lahiri
Nov 27 (Reuters) - Australian shares closed higher on Wednesday, with banks lifting the benchmark after the country's inflation stayed at a three-year low in October, while New Zealand's central bank cut rates a third time in four months with room for further easing.
Australia's S&P/ASX 200 index .AXJO advanced 0.6% to close at 8,406.7. The benchmark had ended Tuesday's session 0.7% lower.
Official data on Wednesday showed that government rebates drove electricity and rent prices down in October. However, core inflation rose to 3.5% in September, taking it further above the Reserve Bank of Australia's $(RBA)$ 2%-3% target band and posing a hurdle to interest rate easing.
Analysts at UBS still see the RBA keeping cash rate "higher-for-longer", followed by a relatively slow easing cycle, as they "expect the first rate cut of 25bps in May 2025, with 25bps per quarter, to a terminal low of 3.10% by Q2-26."
"The risk to our view is a larger-than-expected fiscal stimulus and the U.S. tariffs add to (U.S.) inflation pressure earlier than expected... could result in the RBA delaying the first rate cut to August 2025."
In Sydney, rate-sensitive financials .AXFJ closed 0.8% higher, leading the benchmark index higher, with the "Big Four" banks closing between 0.1% and 2% higher.
Local technology stocks .AXIJ, also impacted by changes in key rates, rose 0.8% at close, boosting the benchmark.
Technology heavyweights Xero XRO.AX and WiseTech Global WTC.AX advanced 1% and 0.4%, respectively.
Domestic miners .AXMM notched a marginal rise of 0.3% at close, helped by rising prices in underlying commodities. IRONORE/
BHP Group BHP.AX fell 0.2%, while Fortescue FMG.AX and Rio Tinto RIO.AX added 1.9% and 0.1% respectively.
Meanwhile, New Zealand's benchmark S&P/NZX 50 index .NZ50 rose 0.8% to finish the session at 13,212.92 points.
The Reserve Bank of New Zealand (RBNZ) lowered its cash rate by half a percentage point to 4.25% and flagged more substantial easing, as inflation moderated to around its target.
(Reporting by Shivangi Lahiri in Bengaluru; Editing by Sumana Nandy)
((shivangi.lahiri@thomsonreuters.com))
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